tv Bloomberg Markets Asia Bloomberg April 23, 2019 10:00pm-11:00pm EDT
we will see. dave: we start with the pboc. australian stocks losing their luster out of it. >> and trade talks. they will be in beijing and then go to the u.s. on may 8. negotiations are underway. we are looking at equity markets. they lost a little bit of steam but we are seeing quite a bit of green on the screen when it comes to the region. australia is in focus. we were just talking about that cpi. unchangedin flat, when it came to inflation. we saw the aussie dollar take a dip. down 8/10 of 1%, hovering around 70 at the moment. we are of more than 1% here at the moment. 12 year highs for the benchmark overall. it is that energy sector that is pummeling things higher. given where the oil price has
been. still around the six-month highs when it comes to create. the rest of the region is seeing this down .4%. it is the dollar store and we need to contend with. we are seeing it strengthened against most asian. this is the bond market. we want to talk about the aussie two-year. the yields are down. they will cute rates and it will be all but confirmed. we see yields heading lower across the board. commodities taking a little bit of a dip lower. froma look at what comes the china bonds. you can see yields ticking higher. we are pretty much flat when it comes to these markets. this is the hang seng as well.
this is the target at 3.15%. they are maintaining that liquidity and adjusting 2.7 4 billion. it is not the triple archive. it were denying they would do that this week. is it enough for these equity markets to rally higher? yearat the chinese 10 yield. we are at one base point higher here. look at my terminal chart. we can see the spread between the china tenure and u.s. treasury. this is interesting. this is the offshore. it has barely buzzed. that usually means stronger read rev.e -- stronger he thinks there is something the authorities are doing to suppress that despite the fact
that we could be seeing gains here when it comes to the currency. dave: lots of moving parts in china. let me try to illustrate that for you. look at our bloomberg chart. this is the one your rate. this is where they came in. that is a 15 basis point discount from where it is. our editor is here. what do you make of this? what are they trying to do? >> as yvonne was alluding to, they are focusing on making sure that there is sufficient liquidity in the system. what they are not doing is cutting rates. either the benchmark lending rate which some economies -- economists anticipated they would do. r., the rr
that would have unleashed more firepower into the banking system. one chris: of the interesting things about this is the focus ofliquidity -- chris: one the interesting things about this is the focus on liquidity and pboc monetary policy. it underscores how much the old-style, traditional economic arecy precepts for china prevailing. talking ago, people are about the pboc and china moving toward a market-based one is very. where interest rates would set whether they were focusing on expanding the economy, boosting inflation. they are still focused on quantitative measures here. how much loans per month are
going out into the economy. injectings the pboc by these methods? the most interesting aspect here is that china has not made strides toward a market-based monetary policy. yvonne: what does that mean for chinese stocks? is there any incentive to buy more? chris: the interesting thing about that is we all know that china's domestic stocks are retail investor dominated. we don't think about it on a day-to-day basis. those investors, i doubt they are looking at things like --lines on the pboc, mls mlf injection. they are at momentum, psychology, maybe the u.s. trade talks and the fact that things
are going better there has given enough momentum for them to keep going. i doubt the pboc moves will play much of a factor in chinese domestic stocks. yvonne: great to have you here, chris. here are the earnings were you, it will be coming pretty thick and thin. cost of international -- this company is in korea. 2,000,000at 71.4 yuan.42 billion they also maintained their 2019 sales forecasts. dave: stock is roughly a quarter above the last month or so. with richard this from the back of singapore.
he is here to discuss what the pboc day. what you think they are trying to do? them anything more than maintaining liquidity in the system? thisrd: the assumption is is a smoothing approach. i think the signal out of the pboc in the last couple of weeks is that the economy has bounced enough. they are not really worried about recession anymore. they maybe looking to linebacker stimulus they have put in over the past year. they always have one eye on the credit bubble. as soon as they are culpable at the economy as resilience, they will be looking to scale back some of the stimulus they put in. scaling back, is it mostly on the monetary front or the fiscal front?
richard: given that the concerns are mainly in the credit bubble, rather than in government finances, you have to expect that the monetary side is going to take the brunt of any reversal of the policy. spending weucture will see, i think that will stay. it seems more likely that will -- that they will be trying to. they don't want to see that progress reversing in the short-term need to offset the concerns over u.s. trade friction. dave: i does want to clarify. say that the tax cuts float unnecessary even back then. why do you think they were unneeded? unnecessary even back then. why do you think that they were unneeded? richard: the destruction to the global economy last year was a
temporary bump. it was not the sign of a global downturn. we got the same message from the commodity markets. the trade talks are going to produce some sort of outcome rather than an aggressive move on china. it seems like there holding a pretty well. when they announced us tax cuts in march, they seemed that was probably one step too far. given the day-to-day have seen over the past month, that does seem to be the case. it is interesting, we are seeing yield curves in the u.s.. that three-month tenure -- ten year is reversing from conversion. you look at what we are seeing when it comes to china, they are less comfortable with stimulus. things are a bit of a contraction there. is the sentiment still a bit are of i have class full --
here?lass full sentiment, richard: i did -- i don't think there is a chance of a downturn connectivity. when you look at most of the domestic economy, not just in asia but europe and america as well, it was very resilient. the markets are probably more interested in manufacturing because of the overrepresentation of manufacturing. overall, i don't think there was ever a serious risk of the session. with or without the fed support. i think what we are seeing now is a realization that things are maybe not as buoyant as they the 12 or 18 months ago but growth looks fine. dave: richard stays with us. he will give us the rest of his
opinions on the rest of the region. paul allen here with an update on the fiscal push from authorities. preparing akorea is big cash injection to boost growth. they are planning and i for budget of over $6 billion to tackle over -- tackle challenges. for adds to a record budget 2019, $6 billion extra. still only two thirds of the growth recommended by the imf and korean central bank. the islamic state says it carried out sunday possible is in sri lanka that killed 321 people and wounded hundreds more. initial investigations are focused on the mastic jihadist group. group.stic jihadist sri lankan stocks returned to they fellthat will -- to their lowest levels in six
years. u.k. lawmakers resume talks to see an agreement on a new deal. the government is testing support before putting in a keep pace -- pisa legislation. theresa may can also face a leadership challenge, putting boris johnson 17 points ahead of the pack. are checkingors with a 12 million vehicles for a legal flaw that could prevent airbags from deploying the crash. they identify two major accidents. this is also looking at fiat chrysler, hyundai, and kia. by this company and electrical overstressed could make them fail. global news, 24 hours a day and on tictoc on twitter, powered by one and 27 hundred journalists and analysts in more than 120 countries, i am paul allen. this is bloomberg. yvonne: why metals could push
raise to muteay the impact of these american sanctions against iran. yvonne: they are hesitant to jump on board. richard.s now is he is still with us out of the lion city. can you look at whether this was inflationary in either way? can you chart the five-year break even? they have not caught up with that spike improved. seem to saydo not this is inflationary in any way. how do you see it? richard: the market is viewing sideways bump broadly for the past 12 months or so. stays in the 60 or 70 area, it doesn't have a big impact on inflation. this year will be a slight drag. the second half will be a small
positive. it is not the sort of thing that will have a big impact on price formation. i don't think central banks will feel this way and small fluctuations. dave: what about india? if you had pick one part of asia that might feel it on the margins, it is probably india. do they have to worry over there? richard: most asian economies are all importers. the other guy is cutting rates, they must be pretty close to cutting rates. i think the modern pushing prices because of high oil isn't really going to be a big concern from this starting point.
>> people are still thinking double cut rates, even with the price of oil going up. how much room is there for a rate cut? there is probably room for another one or two because in india. the underlying inflation numbers have been on the downside. from that point of view, they have a bit of a growth concern there. i think a rate cut or two is fairly realistic. projection isus 5.7%. a complement to go, australia came out with a very benign inflation rate. what does the inflation outlook
tell you about that 5.7% growth right now? is there upside or downside risk to the projection? it tells you to things, they tell you that the developed economies are still having trouble with inflation responded to the tightness in the labor markets. the same as australia, the same as america, japan or canada. i think the growth outlook looks pretty good. --y have a lot of policies policy space if needed. it doesn't look like it will be needed. you will see rate cuts in places like indonesia, the philippines, as well as india as the eurozone. i think there is -- year goes on. roomnk there is plenty of for that expectation to be met and even beaten. dave: let's leave the conversation therefore that. richard jerram.
yvonne: let's get the latest business flash headlines. the company claims customer -- lgng and supply issues is focusing turnaround average on boosting sales of high and ann like led screens. they reached breaking point in the second half of last year. dave: reports out of japan say that nissan will cut earnings to -- predictions to its earnings forecast. boeing sales in china are to
blame. nissan has named longtime -- coove as the ceo following the fall of carlos ghosn. yvonne: the world can't stop tweeting. twitter us first quarter test production shows strong user growth. they reported it hundred million dollars in revenue for the quarter. nearly 20% more than last year. dave: let's look at shares of nintendo. they have done very well for this year. andellar lineup of games the potential entry into china. hedge funds are betting against the company. the short interest is not actually going away. you can look at the specs on nintendo. they are double the level to a your back. yvonne: joining us with a long and short of this is peter elstrom. he joins us from tokyo. what should we be watching out
for when it comes to this latest report out of nintendo. peter: the pressure is building here between the lungs and the shorts on nintendo. on nintendo.shorts they are up 25%. news leaked out that nintendo may get some traction in china. they are teaming up with tencent, the biggest gaming company there and in the world to help try to sell their swi tch console. also, some of their mobile games. one of the things that really surprised us is that the short interest in nintendo increased that day. there was chatter that the increase was so big because they were recovering and getting out of the stock. in fact, when we look at the data, they increase the bets out of that. that was a wager that when we get these earnings later on this week, they were going to be not
as strong as expected in the shorts -- and the shorts would see some of that increase. >> what is going on there? there is clearly a case to be bullish. there is a case to be bearish. which one wins out? peter: there are a few arguments on the bullish side for nintendo right now. part of that is this china story. it is a market they are not cap so far. tencent is an extreme with powerful partner. they are looking to sell the market.onsole in that china has not been a big console market in the past. they want to market some of the mobile games into that country. that is the biggest gaming market in the world. it looks like there is a potential on that front. we will get a new switch console went on this year.
a less expensive version of the one that has been out so far. that could broaden the market of it. intend of has a strong lineup of games coming out this year. that is the bullish case. the bearish case is that they're not getting traction in expanding the games market. there are too many options out there, they have these beautifully quirky games. they are not actually increasing their market share of the overall high. switch reporting on console breaking new ground, what does it matter? peter: there has been some debate about what exactly the new switch consoles are going to look like in the future. thepeople familiar with matter say there is a less version of the switch console that will come out. that will be able to play most of the games that are out there on the market right now. there had been discussion that it would be to models. sources tell us that is not the case, at least for this year. it will be a cheaper model and
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>> 10:29 in hong kong, 12:29 in sydney. i have the first word headlines. has confirmede the dates for trade talks a treasury secretary and trade representative will fly to beijing next week for discussions tuesday. negotiations will cover intellectual property, tech transfer, and agricultural and the top chinese negotiator will travel to washington may 8. >> we are not there yet but we have made a lot of progress. we've had larger scale than anything in the history of u.s.-china trade and that is a
good thing. i don't want to make a forecast, and weve gotten closer are still working on the issues. >> north korean state news says kim jong-un has left on his private train for a meeting with president putin on thursday. russian media say the leaders will hold talks and nhk says putin will suggest starting to six-party talks on the nuclear program. kim's second summit with president trump -- extremist content on the internet. leaders will meet after a gunman killed 50 people at two mosques in christchurch.
warren buffett owns a print media empire but even he thinks the days are numbered for newspapers. he said the decline of advertising has turned the papers from a monopoly to merely competitive. the world has changed dramatically and said most papers are "toast." media is hathaway's cutting jobs to cope with declining ad revenue. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. yvonne: thank you. focusing more on what we have been seeing australia, the miss for the first quarter. nearly confirming that the rba could be pretty close to a rate cut pretty soon. you saw that market reaction when it came to the aussie dollar. bonds are getting a bit today. -- bid today. we are flirting around 70 when it comes to the aussie.
theeems like increasingly, consensus call is we see more easing from the rba. we will see if that comes about that we are seeing some of those forecast being moved up sooner. wirp is the function. attach timeline to that. for the next meeting, may 7. of 1.5 percent, these are overnight index swaps. there is the probability they will move. if you are generous, you would take you looks better. up 64% probability that the rba will not cut. it remains to be seen but it is what the market thanks, given how benign that inflation was. the aussie dollar is really getting hammered with yields pushing lower. yvonne: jpmorgan, calling for a
may or june move from the rba. they are pushing forward with cuts now but given this cpi result. let's continue to watch that. the aussie dollar, biggest drop in two months. we can expect inflation data. joining us from sydney is our deputy bureau chief, james thornhill. we broke down most of the cpi data but is it increasingly likely the rba will start cutting rates pretty soon? was looking before i came on, the rate probability. the market looks to be pricing in a 50-50 shot of a cut in may at the meeting. that rises to around 65% in june and this number today must have really focused the minds of the rba. as you probably mentioned, the inrd moves to a neutral bias february. that was from a tightening bias
before so they are any sort of dovish trajectory. this number today will add more emphasis -- impetus to the. people works, d the endo cut towar of the year but it might come before that. david: might coming winter. talk to us about trends. the latest readthrough of inflation was quite weak. have you seen and of data to show that the winter is the right time for them to move? james: you, i think the jury is out to a certain extent. the tradable's component of the inflation fell in the first quarter so what it shows is the strong rise in oil prices we have seen this year hasn't fed through to rising price pressures. whether that continues is an open question. some upward
pressure as the year progresses but the underlying story is in wage inflation has been almost nonexistent and recent years and trend is going up slightly but there is no wage pressure there. not to mention, the fact that the property price surge in maine urban centers of sydney and melbourne has been calling -- the past 18 months. there is no inflation coming from the property market, either. retailers can't really raise their prices. even on the domestic front, there is no impetus for rising prices. see anre going to upturn, it will come from external factors. the chief being rising prices at the petrol pumps. david: precisely where we wanted you to end that.
david: a big week for oil prices. we reached 74.50 in asia time and since that, we have pared back 40% on the most active contract. iron ore as well as copper. 74.14, i wonder where we go from here with brent? yvonne: six month highs for crude at the moment. confused oil traders about this decision from president trump to not extend the waivers for some of these importer countries.
i think a lot of questions now whether we can continue despite higher or reverse -- this was one take overnight. >> higher could be as high as $100 a barrel. is a base caset and aerial for anyone and for us, the base case is 82 for brent but there is a risk prices continue to rise because heading big year-end, we have this specification change that will probably lead to a big jump up in global demand -- oil demand globally. david: to add to the conversation, guy wolf, merrick's spectrum analytics. nice to see you. china and where do you think oil prices should be? well, you have to distinguish between the long-term scenario and short-term.
the waiver situation is impacting the short-term situation on crude. it is the reasons perhaps not continuing to rally today is because previously, a year or so $80 on brentwe got or above, it triggered a supply response and led to demand destruction. u.s..sed supply from the we are already in the mid-70's. we are relatively small amounts of upside away previous levels that the oil market struggled to sustain itself at. another factor is maybe the reimposition of sanctions are not continuing the waivers is really sort of a bargaining chip ahead of the china trade talks. that has very much been the pattern of the trump administration post sanctions in order to compromise by lifting them in negotiations.
this could be exactly the same thing. a risk so there could be of things reversing, as well but the u.s. are saying they want to bring iran oil exports to zero. how much of iran's exports fall and how quickly do saudi's and other producers increase production to make up for the shortfall? mean, they've done it before so they can do it again. the u.s. also said they wanted to have a total ban on rusal illuminated -- aluminum and then the sanctions were lifted. who is it impacting? the importers of oil, one of the largest being china and who are the u.s. in critical stages of trade talks with? china. i wouldn't pay to much attention to what pronouncements are right now because that doesn't really mean anything on a sustainable basis.
the reality is opec has the capacity to increase production. u.s. oil production has also proven incredibly swift to respond higher oil prices in the past, as well. typically, markets underestimate supply response. david: i guess we leave the oil story there for now. let's move on to copper. there is a demand story, as well and your thoughts on where prices should go from here? guy: yeah, i mean, copper price has been relatively disappointing given the tightness in the physical market. do you have seen the levels and inventory. seems recent backwardation's in the forward curve and the out right price has not responded to
the degree it could. we are very much in a waiting phase. try to his 50 plus percent of global demand. is really thetum critical factor that is going to be the catalyst to move us out of the current price range. we believe we are going to see that pick up, but it is slow going. we are 100% certain we have seen the end of the slowdown but that is not necessarily the same as seeing this with rebound. talks,ack to the trade that is an enormous inhibitor of activity domestically in china. people want clarity. we have seen the end of the be stocking process. the end of the really aggressive slowdown. until we see some clarity, we will not see a strong rebound. realistic tot is expect a decent amount of
pent-up demand coming through quite swiftly. in a market where supply is constrained and unable to react swiftly, prices can rally aggressively toward the end of the year. yvonne: can i still chase the metals rally if china is being less comfortable about stimulus, and where in the metals complex do you like the most now? china the single biggest driver of all metals but the most sensitive are definitely copper and nickel. of those two come a copper is the one that has the most significant inventory shortage at the moment. it definitely has the highest potential to aggressively rally and i don't think we are anywhere near the end of that rally, but what we are missing at the moment is the hard evidence of that pickup in chinese demand that we are expecting. it simply isn't coming through yet.
we expect it to come through but there is no evidence of it right now. people have been burned constantly looking for a breakout in base metals. people are in a wait-and-see mode carried people are prepared to chase it wants you see the hard evidence that people are not prepared to anticipate it. that is why we are stuck in this range. it is certainly not too late to participate. david: all right, died. thank you for coming on the program. guy wolf out of marex spectron. china, hong kong listed anton oilfield. we were a lot higher open yesterday. had fromck gains we yesterday. if oil executives are listening, i know oil is higher but please
think twice before passing that on tumors. 1.8 -- two consumers. oilfield services. we are entering earnings season. 700 companies on the asian market reporting earnings friday. quite a bonanza. think of what we are seeing with the likes of wh group. that is now reversing the earlier gains we saw. sachs, raising the price target on its profit outlook. we are seeing a little weakness today. china mobile was a miss. your calm did a little better. renminbi7 billion before the first quarter. jpmorgan, raising. a-shares in china to overweight. lots to talk about. we will talk about earnings when they come out. india results will be a big
story given oil. we are about an hour away from the open of markets there. futures, flat. down five points. lowdown on what to expect as the trading day gets underway in india. we spoke about how oil prices have supported equity markets and that carried into yesterday's session. the start was very positive. to the first half of trade, there was positive momentum but a complete reversal of that trend by the time closed shop. we were flat to marginally negative, but it was what came about in the interest rates in the sectors and oil and gas. the only outlier was the information technology basket, which has been somewhat of a contrarian trade in the downfall we have seen in the rest of the market. for the currency, there was some weakness.
some looking to exit. the fii. that could be a slight rally and 500 on the nifty will be the next level to keep an eye out for on the downside. yvonne: housing finance is reporting earnings. what is the expectation? divina: the expectations are that you will see a -- housing finance. see process marginally higher. guidance for profitability growth is 15% for the entire year. let's see whether or not they can maintain that. housing finance companies have not been doing well and the last two days, it has taken a lot to the chain. yesterday, the stock hit 9%. we are likely to see a bounce back and recovery back to earnings.
disappointing numbers yesterday. 5.6%, the stock is expected to react slightly negatively this morning. david: a little more than what we saw yesterday. thank you so much. a preview of the indian open. let's look at your latest business flash headlines. while german6% shares are up in new york on reports softbank is considering taking a stake in the company. sources say financial advisors have been enlisted to work on a deal to buy bonds that can be converted to wirecard shares. softbank could boost investor confidence in the company after there was allegedly counting misconduct at its singapore operations. yvonne: reports from london say the government has given permission- huawei to work on five g networks. the council has agreed to let them build antennas and other
non-core infrastructure. decision defied criticism from washington and comes ahead agencyu.k. intelligence to threat -- one of threats. david: taiwan is seeing the biggest fall in industrial output in seven years, led by decline in the manufacturing of electronic components amid the weakening tech sales in yangon trade war between the u.s. and china. factory performance element 10% in march. well below even the most bearish estimates of 2% -- 8.2%. yvonne: reporters go head-to-head in the battle of the charts coming up. this is bloomberg. ♪
yvonne: time for battle of the charts. they are going to pick their best charts against each other. don't get physical, guys. viewers can access the charts at the bottom of your screen. gtv to check out the functions we use. david: let's unleash the aggression. with ourk things off lady today. >> china's corporate bonds right now, which account for about one
third of china's entire bond market. let's dive into the charts. -- we have the white line showing yield on five-year aaa rated bonds and the turquoise line showing the yield on the cdb's. the yellow line shows the spread between the two which is near the highest in about five months showing the level for yield spread for corporate bonds are actually rather attractive as china's economy stabilizes. government bonds are more likely to take a hit because of the higher inflation than corporate bonds because corporate bonds have the yield threat curtain -- cushion over the cdb's. we have investors telling us it is time to buy the corporate bonds right now and they will outperform them in the first half. david: that's nice, actually. yvonne: chris? china's bond market is a
hot topic, but what i want to was at is something i think underappreciated over the past few months. in the old days, we used to say that when the fed makes a dovish turn, emerging market stocks are among those that benefit. shows the g3e central bank balance sheets. you can see until the start of this year, they were following emerging-market currencies were essentially following the g3 central banks. the g3 central banks have stopped policy normalization, but take a look at what has happened to emerging-market currencies. they have dived the end of january. the bottom line shows emerging markets stocks excluding china. china is such a big part of the emerging markets stock index but if you take china out, emerging market stocks have also been doing pretty poorly.
there are a couple of theories people have put out there for this. one is from the institute of international finance, that during the decade-long era of easy money, people loaded up on emerging markets so much that they don't have any appetite to anymore.ose appetites my colleague in new york says if you look to share of imports that china has from emerging markets, it has peaked. they have come off of it and as china's consumers get more sophisticated and they are importing more stuff from developed markets, not emerging markets, then emerging markets are not going to benefit as much. either way, it gives you pause if you are in emerging markets stocks stand to take a look at this anomaly or new development that has happened over the past few months. david: major trend for chris's chart.
say -- it doesn't senior care that you lost. yvonne: i would go with chris, as well. this is something we talk about all the time and yet we aren't seeing rick -- currencies recovering in a new way. something to look ahead to given the fact that every central bank has made a dovish turn. almost. david: not the bank of japan, though. we will talk about that tomorrow. when will they ever raise interest rates? >> not in our lifetime. yvonne: middle have to have you back tomorrow for that. gtv for all of those charts. this is bloomberg. ♪
♪ >> this is "bloomberg technology," i'm emily chang in san francisco. in the next hour, snap delivers strong results thanks in part to its app. daily active users increased for the first time in the year. --tter reports positive positive results, drawing more consumers and advertisers but concern about hate and misinformation remain. i sit down with the cfo.